Inventory – What it is, definition and concept

The inventory is the record of the assets that belong to a natural or legal person. Thus, there is evidence of a series of assets or objects.

That is, the inventory, in general terms, is a document where all the belongings of the individual or company are recorded. This, for accounting or other purposes.

Usually allusion is made to the inventory of a company’s stock, where raw materials, intermediate goods and final goods that the firm offers to its clients are recorded.

In the same way, if we refer to a person, he must make an inventory of the goods that are in his property in case he wishes to acquire insurance against theft.

Another situation in which an inventory is carried out can be, for example, when a military group prepares an inventory of the weapons at its disposal before departing on a special mission.

History and origin of the inventory

The history and origin of the inventory dates back to ancient times. The sources consulted agree that the Egyptians gave the most emblematic example of how inventories were made from the first civilizations, in this case, of food. In this way, the aim was to store food for times of scarcity.

But the Egyptians weren’t the only ones. For example, pre-Hispanic civilizations such as the Inca also would have had a system to keep an inventory of the crops that were distributed among the population.

Importance of inventory

Inventory is important because it allows, for example, companies to plan their activities and always keep a minimum stock available for sale. Thus, customer demand can be met. This, without keeping the merchandise in the warehouse for a long time because it implies a cost.

Also, taking inventory on a regular basis allows the company to identify whether the accounting records match the physical inventory. The latter is a manual count of the firm’s stock. If an inconsistency is found, theft or loss may be occurring.

On the other hand, a person can take an inventory of their assets to estimate the value of their assets.

Inventories can be classified based on different criteria. For example, depending on when it is carried out, the inventory can be:

  • Initial: Before an action or an accounting period.
  • Final: At the end of an operation or accounting year.

Also, according to the frequency, the inventory can be:

  • Periodic or intermittent: When it is done from time to time, for example, monthly, quarterly or annually.
  • Permanent: It tries to account for variations in inventories in real time.

On the other hand, depending on its form, that is, the type of inventory, the inventory can be:

  • Raw material: It counts the inputs of a company that will then go through the production process.
  • Of products in process: Includes those products that are not finished to sell to the customer or consumer.
  • Of finished products: Consider all merchandise ready to deliver to the customer.

Finally, from a logistical point of view, the inventory can be classified as:

  • In anticipation or anticipation: The one that has to respond to an eventual expected increase in demand. In other words, there are grounds to expect an increase in customer orders. For example, prior to the winter season, a higher demand for scarves is expected.
  • In batch: They are those that are requested by lot, that is, in a significant quantity. This, to reduce costs and take advantage of economies of scale.
  • On consignment: They are the goods that are delivered to a third party to offer them on behalf of the consignor (See: consignment).
  • From obsolete stock: It includes those goods that, for various reasons, such as damage or expiration, can no longer be sold.
  • Of security: It refers to that inventory that can be disposed of in the event of an unforeseen increase in demand. Unlike anticipation inventory, the surge in requests is not expected under existing foundations.
  • Regular or cyclical in nature: It allows to fulfill a request when the firm requires more stock as a regular part of its activities.

Inventory example

Let’s look at an inventory example in a fairly simplified version:

Code Description Initial stock Tickets Departures Final stock
A101 White A4 bond sheets
(Packages of 100 Loro brand units)
43 twenty fifteen 48
A102 White A4 bond sheets
(Packages of 100 Alcorp brand units)
47 24 twenty 51
A103 Favella brand blue pencils 150 fifty 80 120
A104 Favella brand black pencils 130 fifty 70 110
A105 Favella brand red pencils 120 fifty 40 130
A106 Casio brand blue pencils 300 twenty fifty 270
A107 Casio brand black pencils 270 twenty 30 260
A108 Casio brand red pencils 310 twenty 40 290

How to take an inventory

In this article we will give some very general guidelines for making an inventory, as there are many factors to take into account such as the characteristics of the stocks (whether they are perishable or not, for example), the volume of the business (it is not the same to make an inventory from a small store than from a large company), among others. However, there are some guidelines that should always be followed:

  • To do the inventory it is important that the stocks are properly classified with a code and stored in a specific place. That is, we must start from an order in the warehouse.
  • We must choose the system by which we will do the inventory, for example, if we will use software or do the registration manually in an Excel sheet.
  • The frequency in which the inventory will be made will be chosen, in case it is not permanent.
  • It is advisable to do a physical inventory with a certain frequency, and the date on which it is scheduled should preferably be a period of low activity, so that it does not affect the operations of the company.

Deja un comentario

Tu dirección de correo electrónico no será publicada.